Lis pendens in real estate are legal public notices that someone has filed a lawsuit on a property. Anyone who has a claim against the property, whether it is the IRS, a contractor who did work on the house, the mortgage company, or even a tenant may file one.
- It signals a pending lawsuit to potential buyers, making the house almost unmarketable
- Lenders use it in the foreclosure process, but homeowners may also use it if they have a case that the lender took advantage of them in some way
- Tenants may also use it if the landlord wrongfully evicted them during a transaction
Whether you are an owner facing one or you file one against the owner of a property, seek legal advice about your situation. Lawsuits are very complicated matters. They require legal counsel.
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What Does Lis Pendens Do?
A lis pendens in real estate signals a pending lawsuit. Anyone with an ownership interest in the property can file one. Some reasons to file one are:
- Divorce – when spouses disagree on how to divide the house
- Probate – When heirs contest a will
- Defrauded buyers – the owner sells the house to someone else after signing a contract
- It can be filed to get a title changed on a property
- Unpaid mortgage
- Unpaid property taxes
- Mechanic’s lien – Someone works on the house and the owner doesn’t pay them
- Unsafe conditions – the township may file one over code violations
- Foreclosure – It is often the first step in the process
It begins litigation, which can be a long process. It clouds the title, and it makes the house almost unsellable until the issue is cleared up. The reason it is so hard to sell is that the issue follows the sale to the new owner.1
Is It a Lien?
A lis pendens is not a lien. It is a legal notice of court action, while a lien is an actual claim against the property. It gives the owner the right to foreclose on the property if he/she defaults. There are two types:
- Voluntary – Mortgages and mechanics
- Involuntary – Tax
It does not prevent the owner from selling the property, but it may reduce its value if it stays attached after the sale. A lis pendens, on the other hand, is a notice that there may be a lien. It does not guarantee that the courts will rule in the claimant’s favor.2
Public Record
Lis pendens are public records. It:
- Shows potential buyers that there is a dispute and litigation is pending
- Is related specifically to the property
- Protects the claimants claim pending the outcome of the lawsuit
- Is only lifted after the lawsuit is settled
If the claimant doesn’t file one then they may lose their opportunity to put a lien on the property.3
Will a Lis Pendens Stop Foreclosure?
There is a way a homeowner may be able to use a lis pendens to stop foreclosure. When you apply for arbitration, you file a lawsuit with the court to apply for arbitration.4 It may be an effective way to:
- Present your case to a neutral party
- Give you time to present your case about your mortgage, income, and expenditures
- Get an agreement from the lender to re-evaluate and possibly refinance the mortgage
Only do this if you think that your lender took advantage of you in some way. Do you have a case to sue your lender? You must act and file a lawsuit. If you don’t then this approach can bring more problems than it solves. You may be sued and subject to legal penalties.5
Not the Same as Foreclosure
A lis pendens is not the same as a foreclosure, but lenders file one when they begin the process to foreclose on a house.
Can you sell a house with a lis pendens?
You can sell a house with a lis pendens, but you probably won’t be able to. Even if someone wants to buy, they probably can’t because:
- Lenders usually won’t finance a mortgage until it’s removed from the title
- Title companies won’t insure the property
Since it gives notice to potential buyers that there is pending litigation on the house, most potential buyers steer clear because if they buy the house they must abide by the outcome of the lawsuit.
How Long Does Lis Pendens Last?
A lis pendens lasts until someone removes it from the title.
- It begins when someone files a lawsuit and subsequently a lis pendens to notify people that there is pending litigation on the property.
- It ends when it is removed from the title.
How to File
You serve a lis pendens by filing it with the court. It is a legal notice of an impending lawsuit, so you file it with the clerk of the court that has jurisdiction. The clerk records it in the county’s records department with the title.
How to Get Rid of
The way to get rid of a lis pendens is for the court to remove it from the title. Here are ways this happens:
- Settlement of the lawsuit
- Agreement reached through arbitration between the grantor and grantee
- Expungement of a wrongful claim
- Cancellation because the owner makes repairs and brings the property back up to code
- Expiration
Usually, they expire after three years, but different jurisdictions have different laws, so learn what the rules are in your area.1
Can a Tenant File a Lis Pendens?
A tenant may file a lis pendens. Remember, though, that it is a notice of pending litigation. You must act by filing a lawsuit, or you open yourself up to legal problems of your own.6 Here are some valid reasons to sue your landlord:
- They wrongfully withhold deposits
- The property is uninhabitable
- You get injured on the property
- The landlord violates your right to privacy
- Wrongful eviction
Most of the time you won’t file a lis pendens for these unless there is a third party involved. These actions happen when the owner wants the tenant out so they can sell the house.7
Final Thoughts on Lis Pendens in Real Estate
Lis pendens in real estate are important legal notices. They protect your rights to sue the owner, and they let any potential buyer know there is pending legal action that clouds the title.
It is a very serious legal matter. It can render a property unmarketable, and on the other hand, put the person who files it in legal jeopardy if it is frivolous. Don’t take this action without consulting an attorney. Find out if you have good grounds for a lawsuit, and then proceed with competent legal representation.
